Pipette
Trading BasicsA fractional pip equal to one-tenth of a pip. Shown as the fifth decimal place for most pairs (0.00001) or the third decimal for JPY pairs (0.001).
What Is a Pipette?
A pipette (also called a fractional pip or point) is one-tenth of a Pip. Most modern brokers quote currency pairs to five decimal places instead of four, and the fifth decimal is the pipette. For EUR/USD, a pipette is 0.00001. For USD/JPY, a pipette is 0.001.
For example, if EUR/USD moves from 1.08500 to 1.08501, that is a 1-pipette movement. It takes 10 pipettes to equal 1 pip.
Why Brokers Use Pipettes
Fractional pip pricing (also called 5-digit pricing) gives brokers more flexibility with Spread pricing. Instead of only being able to offer a spread of 1 or 2 pips, a broker can offer 0.8 pips or 1.2 pips. This benefits traders by reducing transaction costs, especially on high-volume pairs like EUR/USD and USD/JPY.
Pipettes in Practice
When a broker quotes EUR/USD at 1.08503/1.08512, the spread is 0.9 pips (or 9 pipettes). The last digit of the quote is the pipette. Most trading platforms display the pipette in a smaller or superscript font to distinguish it from the full pip digits.
Related Terms
Pip
The smallest standard unit of price movement in a currency pair. For most pairs, one pip equals 0.0001. For JPY pairs, one pip equals 0.01.
Spread
The difference between the bid (sell) price and the ask (buy) price of a currency pair. The spread is the primary cost of making a trade.
Tick
The smallest possible price movement on a trading platform. In 5-decimal forex pricing, a tick is one pipette (0.00001 for most pairs, 0.001 for JPY pairs).
Point
On MT4 and MT5 platforms, a point is the smallest price increment. For 5-decimal pairs, 1 point = 0.00001 (one pipette), so 10 points = 1 pip.
Bid-Ask Spread
The difference between the bid price and the ask price. The bid-ask spread is the transaction cost of executing a round-trip trade.